State's pensioners not as hard hit as others

AUSTIN - As with most retired teachers in Texas, Kelley Rogers' main source of income is his pension, which is managed by the state's Teachers Retirement System.

So, as he has done in the past, the 62-year-old Lubbock resident watched in disbelief Monday when the market's index dropped below 10,000 points for the first time in five years.

"I am not too nervous, just kind of concerned," Rogers said. "I'm in pretty good health, and I am not opposed to finding another job if I have to."

He may not need to, state officials and financial experts said Monday.

Although the state's pension plans have been hit hard by the current economic crisis, they are still in pretty good shape and are expected to survive the worst financial meltdown the United States has experienced since the Great Depression of the 1930s.

That is reassuring news to the thousands of retired government employees and teachers in West Texas. Although 9.9 percent of all Texas residents are 65 and older, in most South Plains and Panhandle counties, seniors account for more than 11 percent of the population; and in rural counties, such as Carson, Castro, Crosby, Floyd and Lamb, it is more than 15 percent, according to the U.S. Census Bureau. Moreover, a good number of those seniors live on state government pensions, not on Social Security benefits.

"Despite of what happens in the market, you're still guaranteed a certain amount of money," state Rep. Carl Isett, R-Lubbock, said of the Teacher Retirement Fund and other funds the state of Texas manages on behalf of its retired and current employees.

The worst that can happen, said Isett, who sits on the House Appropriations Committee, is that retirees may not see a cost-of-living increase in a few years. That was the case in January when, for the first time in six years, retired teachers all over the state received an extra monthly paycheck - the equivalent of a cost-of-living increase.

John O'Sullivan, secretary treasurer of Texas AFT (American Federation of Teachers), which counts more than 50,000 teachers in its ranks, said that despite the stock market's volatility in recent years, the state's $109 billion Teachers Retirement Fund has had an average annual growth of 8 percent, which is higher than most 401(k) retirement plans the private sector offer.

"Do we have concerns? Of course, we do," O'Sullivan said of the latest financial storm, which the $700 billion rescue plan that Congress authorized for Wall Street last week has not been able to stop.

"All of our marbles are with TRS and that is why we worry about its well-being," O'Sullivan said. "But these are long-term investments and in the long run they're going to be fine."

State officials have long watched, not just the TRS, but other funds.

State Sen. Robert Duncan, R-Lubbock, along with state Sen. Dan Patrick, R-Houston, for example, recently questioned why a top notch attorney charged the fund $750 an hour for legal counsel.

Eric McDonald, chief investment officer and owner of McDonald Capital Management in Lubbock, said retired and current state employees may be in better financial shape than workers in the private sector who are vested in 401(k) retirement plans.

"They should feel comfortable that they have professional managers," McDonald said.

On the other hand, some people who are vested in 401(k) retirement plans often make costly mistakes because they lack the expertise to manage their portfolios.

McDonald estimates that between 25 and 30 percent of his clients are 65 and older, and if they are scared of the wild stock market ride, they don't show it.

"Believe it or not, I haven't gotten a lot of phone calls," he said. "Luckily my people are not panicking."

Rogers, the retired Lubbock teacher, said that besides being in good health and ready to take another job, his wife, Karen, is still working as a teacher at the Frenship Independent School District and, thanks to her employment, he has health insurance. The couple's three children are now married and have their own children.

"As long as she is working and I am in good health we should be OK," Rogers said.